The Difference Between Per Stirpes and Per Capita
Estate planning can be a complex affair. Not everyone leaves behind a specific will stating exactly how they would like their property distributed and who they would like to receive what property. In fact, doing so is not isn’t always possible. It is often difficult to imagine the variety of possible situations your family members and loved ones could be in when you pass away. Who will have children, jobs, and income, and who will have passed away, gotten married, or moved away? Given the uncertainty of the future, not everyone feels capable of laying out a specific list of beneficiaries by name.
Per stirpes and per capita are two terms commonly used in wills and living trusts to guide the distribution of property. Both terms are a type of general directive that gives an outline for distribution of the estate, with flexibility allowed for circumstantial changes. In addition, if someone does not leave a will, a state may divide assets on either a per stirpes or per capita basis, depending on the laws of that particular state and how it handles the division and distribution of property.
Per Stirpes Property Disposal
If a will or trust specifies that an estate should be divided under a per stirpes directive it means that the will maker is specifying a certain hierarchy of division based on the relationships of individuals to the deceased. In a basic per stirpes division, property is doled out as follows:
- Beneficiaries who are closest in relation to the deceased each receive an equal share of the property. If one of those closest relatives is deceased, his or her descendants (if any) will evenly share the part of the property that would have gone to their deceased parent. If that person has no descendants, their share is put back and divided among the remaining closest relatives.
This is a difficult concept to imagine without an illustrative example, but becomes fairly simple once you grasp the real-life application of it. Imagine the following scenarios, all examples of the per stirpes policy at work:
- Maude has two children, Steven and Joy. Maude passes away, and Steven and Joy are both still living. As her two closest beneficiaries (her children), Steven and Joy will each receive half of her estate.
- Maude passes away, but Steven also passed away the year before, leaving behind his three children (Maude’s grandchildren). Joy will receive half of Maude’s estate; Steven’s children will equally share the half of the estate that would have been Steven’s, meaning each one of the three will receive one third of Steven’s half.
- Maude passes away, but Steven has also passed away the year before; however, Steven had no children. Joy will receive both her share and Steven’s.
Per Capita Property Disposal
Per capita is a much simpler concept than per stirpes; this directive simply states that all members of a specific group will receive an equal share of the estate. What group this is remains up to the estate holder. If, for example, you state in your will that you want all of your children and their children to divide the estate, it will be evenly divided among those people. This might seem overly simple, but keep in mind that at the time you write your will, you do not know how many children your children will have had at the time of your passing, so attempting to list beneficiaries by name, or even to state how many there are, is not possible. Nor is it possible to list exactly how much each person should get since you may be unsure of the amount your estate will be worth at that time.
Per capita division allows you to be completely general, stating something as broad as “all of my descendants” to define the capita group; you can also be specific and list a specific group of individuals by name. Should any of the members of that group be deceased, their share is not set aside; rather it is mingled back into the main estate and divided along with the rest among the others.
Estate planning can be a complex situation; the key to peace of mind is to ensure that you leave your wishes behind in clear language and concise legal terms. The methods of property division described above are commonly-accepted and understood ways to dispose of your estate and can be extremely helpful because they are defined by statute and provide a clear rule for distribution that will eliminate ambiguity. It is always best, though, to seek the help of an attorney regarding your estate plan.